By: The Quinnipiac University Economics Research Team, Niamh Savage
Throughout this time period, there was a decline in the interest rates of all CEE currencies. The greatest variation, in percentage terms, was in Slovakia, and they had the largest decline in interest rates (pink line). This is consistent with the three prior week’s findings, so this is still the country to watch. The Romanian Leu (yellow line) showed the least variation in percentage terms relative to other regional currencies; it did not continue to show a strengthening of their currency to the Euro, but it declined by the least.
Source: Eurostat and own calculations. Daily EMU convergence criterion bond yields (i.e., central government 10-year bond yields)
Throughout this time period, all of the returns showed a decline, suggesting an increase in demand for their bonds and increase in prices. Relative to their own historical trends, none of the countries kept their interest rates within their historical boundary. This suggests that we should continue to see movement in the yields for all CEE currencies over the coming weeks as they either return to their means or settle on new levels. However, based on InvestCEE’s The Global Interest Rate Challenge for Central European Economies, it’s expected that the interest rate will continue to lower, so the currencies will likely adjust to new levels.
Source: Eurostat and own calculations. Daily EMU convergence criterion bond yields (i.e., central government 10-year bond yields). The center line is a rolling three-month average. The upper and lower boundaries are the average plus and average minus one standard deviation, respectively, for the same three-month period.